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Overseas investors have pumped in over Rs 6,700 crore in the equity market this month so far amid hopes of the government’s fresh initiatives on policy reforms.
During August 1-24, foreign institutional investors were gross buyers of shares worth Rs 34,814 crore, while they sold equities amounting to Rs 28,065 crore, translating into a net investment of Rs 6,749 crore ($1.21 billion), according to data available with market regulator SEBI.
According to market analysts, despite slowdown in the economy and high interest rates foreign investors are showcasing confidence in the Indian stock markets amid expectations of the government’s fresh initiatives on policy reforms.
“I think FII inflows will continue in the domestic equity market, given the fact last year was bad for stocks. Also, weakness in the rupee is favouring foreign investment.
“But, the biggest trigger is FIIs are pinning hopes on the government’s fresh initiatives on reforms. However, if there are no policy reforms, we might not see the FII flows being sustained at the current levels,” Rajesh Jain, Executive Vice-President (retail research) at Religare Securities, said.
Marketmen also said the reason behind the renewed confidence by FIIs in Indian markets is the government indicating a soft stance on the controversial General Anti-Avoidance Rules (GAAR) and retrospective taxation issues.
In addition, FIIs have infused Rs 1,051 crore in the debt market so far this month.
Buoyed by strong FII inflow, the BSE benchmark index, Sensex, has gained 547 points or 3 per cent so far this month to close at 17,783.21 points on Friday.
Taking the latest inflows into account, FIIs have infused a net amount of Rs 59,014 crore so far this year and Rs 25,303 crore into the debt market during the same period.
However, FIIs had mostly stayed away from Indian equities in 2011. They flocked toward the debt market in 2011 with a net investment of Rs 20,293 crore, while pulling out Rs 2,812 crore from equities, amid severe volatility in the capital market last year.
The number of registered sub-accounts on August 24 stood at 6,365, while the number of registered FIIs was 1,754 during the same period.
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